The Supreme Court of Ohio today rejected challenges to Columbia Gas of Ohio’s $68 million rate increase approved by state regulators in 2023.

In a unanimous opinion, the Supreme Court found the Public Utilities Commission of Ohio (PUCO) did not abuse its discretion when it approved a rate increase agreed to by several parties, including the Ohio Consumers’ Counsel, which represents residential consumers, along with business, educational, and natural gas supplier organizations.

Objections to Columbia’s rate increase were raised by the Environmental Law & Policy Center and the Citizens’ Utility Board of Ohio. Writing for the Court, Justice Jennifer Brunner explained that the two groups primarily objected to raising the monthly fixed cost portion of residential bills to $58 from $36. The groups also contested eliminating programs that Columbia funded to help all customers reduce their gas consumption.

The opinion noted that Columbia will continue to offer a “demand side management” program to all low-income customers and will contribute $70 million to a weatherization program for low-income residents to improve the energy efficiency of their homes.

Chief Justice Sharon L. Kennedy and Justices Patrick F. Fischer, R. Patrick DeWine, Daniel R. Hawkins, and Megan E. Shanahan joined Justice Brunner’s opinion. Eighth District Court of Appeals Judge Michelle J. Sheehan, sitting for Justice Joseph T. Deters, also joined the opinion.

Utility Seeks Rate Increase
When seeking a rate increase, Columbia proposed continuing to use a “straight fixed variable” rate design adopted in 2008. The rate seeks to address an issue from before 2008, in which the gas company was incentivized through its rates to encourage consumers to use more gas, which in turn acted as a disincentive to offering energy-saving programs to its customers.

Under the new design, the monthly fixed costs of distributing gas to homes and businesses are separated from the costs of selling natural gas. The PUCO found that the new rate also spreads fixed costs more evenly throughout the year, making gas bills more predictable and less susceptible to large increases during cold-weather spikes.

The opponents challenged the new fixed rate as excessively high and argued that eliminating energy savings programs for non-low-income customers would lead to higher bills. The PUCO rejected the arguments in February 2023, and the groups appealed to the Supreme Court, which must hear these types of appeals.

Supreme Court Analyzes Rate Proposal
Justice Brunner explained the Court rejects PUCO orders if they are unreasonable or unlawful. She noted the opponents’ arguments centered on the PUCO having failed to prove that the proposal, as a package, benefited ratepayers and was in the public interest.

In examining the PUCO’s order, the Court disagreed with the opponents’ arguments. The Court found that ratepayers will save $120 million a year by eliminating non-low-income demand-side management programs. This is in the context of Ohio having deregulated its natural gas industry, separating the monopoly service of distribution from the competitive service of supplying natural gas, the opinion noted.

The Court stated that the record shows that those testifying in the case at the PUCO explained non-low-income users can participate in energy saving programs offered by natural gas sellers, and it is unclear from the record whether any such services are available from gas suppliers. The Court concluded that the overall benefit of reducing ratepayer bills by not offering the programs, along with discontinuing the collection of $10 million in other customers' costs for providing energy efficiency programs, outweighs the costs.

2024-1548. In re Application of Columbia Gas of Ohio, Inc., Slip Opinion No. 2026-Ohio-2381.

View oral argument video of this case.

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